The Iron Range Democrats who make up most of the Iron Range Resources and Rehabilitation Board devised a system in 2014 to protect the agency's taconite tax revenue from ogling Republican raiders from the south.
But they never actually moved any money, at least not yet.
Mining companies don't pay property taxes, so they pay a per-ton tax on their taconite iron ore shipped instead to help fund their share of schools and municipal governments like all other businesses do. It's called payment in lieu of property taxes.
The IRRRB gets some of that money, too, and is in charge of dolling it across the state's mining region to help bolster economic development and build up public infrastructure, things such as schools and fire halls.
But in 2011, a Republican-controlled Legislature tried to dip into the IRRRB's biggest trust fund, the Douglas J. Johnson Economic Protection Fund, which now has about $175 million. (The trust was originally intended to help pay for future economic development when taconite ran out.)
Republicans wanted to take $65 million from the fund to help balance a state budget shortfall, leaving an IOU behind. After all, Republicans said, the IRRRB was a state agency under their fiscal purview.
The transfer to the state was stopped by the veto pen of DFL Gov. Mark Dayton, a longtime ally of Range lawmakers. Problem solved. At least temporarily.
In 2014, however, worried DFLers passed legislation (they were back in charge in St. Paul) that established an all-new, quasi-private entity, a nonprofit corporation called Range Trust. The plan was to put most of the Douglas J. Johnson money into Range Trust so no future governor or Legislature could tap into it. Range Trust would then fund the projects IRRRB would approve (usually just interest on the account is spent, not the corpus.)
"Several times in recent years, either governors or legislatures have looked at the fund and tried to use it to balance the state budget," then IRRRB Commissioner Tony Sertich said in 2014. "But it's not state money; it's local property tax money, and it should stay local."
"At some point, the stars are going to line up where we can't block it," Sertich added.
Exactly three years ago Monday, the IRRRB voted to move up to $100 million from the IRRRB to Range Trust. But that transfer has never happened, said IRRRB Commissioner Mark Phillips, and the trust fund is still vulnerable to potential raids from St. Paul.
Now, Phillips is moving to finalize details that would allow the IRRRB board to move the money sometime in 2018 - before Dayton retirees and before, potentially, a Republican takes his place.
"Range Trust exists as a corporation. There's a board that continues to meet and is legal. But we never set up any accounts or established the process on how the money would be moved and how it would be'' spent, Phillips told the News Tribune. "And we need to make sure if they decide to do this, it's (the transfer) irrevocable, or it really doesn't matter."
At the board's next meeting, planned for early January, Phillips will ask the IRRRB board to transfer the first $50,000 to Range Trust, which is run by a separate board of directors outside of state government. Range Trust would use that seed money to complete its organizational process and develop the system of accepting and awarding money as envisioned in 2014.
A much larger transfer could follow later in 2018.
"The board may well decide by next December (after the 2018 election) that they want to move the money then. But if we aren't ready, if Range Trust isn't up and running properly, they won't be able to do it,'' Phillips said.
For his part, Phillips said he's not as worried as some others that Republicans would raid the fund, noting how unpopular raiding local property taxes would be. But he says several lawmakers on the board are still nervous enough to act.
Grand Rapids school project may get IRRRB money
An effort to build two new elementary schools in Grand Rapids, already voted down once by voters, will get another shot in April when a referendum is planned by Independent School District 318.
IRRRB board members are expected to vote in early January on a proposal to contributed $4.7 million to a roughly $74 million building plan (down from about $80 million in 2015) to ease overcrowding in one of the region's few school districts with a growing elementary school population. The four Grand Rapids area elementary schools were originally built for 44 sections of K-5 students. They currently have 56 sections of K-4 with fifth graders moved to a crowded middle school.
The new plan includes two K-5 neighborhood schools of 750 students and a 300-student community school in Cohasset that would serve K-5 students.
The IRRRB money would come from the agency's relatively new Iron Range School Consolidation and Cooperatively Operated School Account, even though there's no other school districts involved. The fund was established as a carrot for Range districts to merge buildings and services as the regional population ages. The goal was to see combined schools built rather than multiple small schools in areas seeing fewer kids.
"It's not consolidation, really, but Grand Rapids is such a big district, it serves such a large area, that this makes sense,'' Phillips said, noting other districts already had merged into Grand Rapids, the goal of the IRRRB plan.
To make it more palatable to prospective critics, Phillips said, all of the IRRRB funds will go to basic infrastructure, not the actual buildings, things like cleaning up the land, street access, utilities and sidewalks.
"We would do infrastructure all the time for (public buildings), so we're not doing anything unusual,'' Phillips said
Grand Rapids school officials told the IRRRB they needed the decision as soon as possible as they move toward notifying the state and printing ballots for the April referendum.